Gen Z Is Drinking Less: What It Means—and How Alpha Software Helps

For years, alcohol has been considered a rite of passage for generations, but Gen Z is breaking the mold. In what experts are calling the “NoLo movement,” more Gen Zers are either saying “no” to alcohol compared to previous generations or favoring beverages with “low” alcohol content in support of their health and well-being goals.

However, Gen Z’s alcoholic abstinence isn’t the only significant takeaway of this movement. Their sober-curious stance also indicates Gen Z’s shift toward more creative drinking alternatives, from functional drinks to cannabis-infused beverages. These trends are prompting beverage companies to rethink their production strategies—and fast.

In this article, we’ll discuss what Gen Z’s drinking habits mean for beverage manufacturers. We’ll also explore how the use of software can help companies better capitalize on these evolving trends.

The Data: Analyzing Gen Z’s Shifting Alcohol Consumption Habits

Major news outlets and surveys, including The New York Times and The Wall Street Journal, have consistently reported that Gen Z is curtailing their alcohol consumption. Here are some statistics to put this into perspective:

• A Gallup survey revealed that the percentage of adults under 35 years of age who consume alcohol has decreased by 10%, from 72% in 2001-2003 to 62% in 2021-2023.
• More recently, an OhBEV report found that Gen Zers drink 20% less alcohol per capita than the Millennials and Baby Boomers.
• A S. Nielsen study revealed that 47%, or nearly half, of Gen Zers had never had an alcoholic drink.
• The nightlife landscape, once dominated by all-nighters and busy bar counters, is slowly being replaced by a wave of sober bars popping up across the U.S.

So, what’s the reason that Gen Zers are distancing themselves from alcohol? The fundamental reason seems to be an increased focus on health and wellness.

Another reason for this shift is Gen Z’s low preference for in-person socialization. Since they spent much of their formative years behind screens, especially during COVID, many missed out on being part of social situations where alcohol typically plays a strong role.

There is yet another emerging perspective that chalks up Gen Z’s non-alcoholic stance to their lack of adequate income. Some analysts anticipate that Gen Zers’ alcohol consumption will increase as they get older—likely by their mid-30s, when they reach the peak of their spending abilities.

The Rise of Functional, CBD, and Infused Beverage Alternatives

The general idea is that Gen Zers are cutting back on alcohol, but the bigger picture is that they’re also replacing it with “herbal” substitutes with claimed health benefits. Lately, there has been a rise in the consumption of medicinal and drug-infused drinks among the Gen Z population, typically:

• Probiotic sodas for gut benefits and adaptogen-enriched drinks for alleviating stress
• Alternatives like cannabidiol (CBD) and tetrahydrocannabinol (THC)-infused beverages that induce an “alcoholic high” without the hangover or health risks.

In a 2022 study by New Frontier Data, it was found that 69% of Gen Z adults between 18 and 24 prefer cannabis to alcohol. Of these, 56% are already consuming cannabis in some form as a replacement for alcohol. A poll by CrescentCanna revealed that 77% of adults who consume cannabis beverages have reduced their alcohol intake. These trends reveal that the beverage sector also faces stiff competition from cannabis products, which are now legal in many U.S. states for recreational and medicinal use.

New Growth Opportunities: How the NoLo Movement Impacts Beverage Brands

The NoLo movement has driven companies to understand how Gen Z interacts with alcohol and is moving toward more mindful drinking. Food manufacturers can find ample opportunities to expand beyond alcohol-infused beverages and diversify their offerings.

Here are some upcoming trends:

• Elevated non-alcoholic and low-ABV drinks that seem like creative replacements for alcohol, not complete eliminations. Consider hibiscus spritzers instead of rosé wines or cold-brew espresso martinis.
• An emphasis on sustainable and personalized beverages that focus on reducing waste and appeal to Gen Z’s independent, DIY mindset. For example, this may include infused drinks made with upcycled ingredients, such as citrus peels or coffee cherry husks (cascara), and non-alcoholic aperitif mixers like Ghia’s that let drinkers decide how much alcohol they add.
• Instagram-worthy, experiential beverages that appeal to Gen Z’s quirky tastes and sensibilities, like the mood-enhancing functional drink by Kin Euphorics that gives a healthy buzz without the alcohol.
• Nootropics drinks, CBD sodas, and other functional drinks that provide a cognitive boost.

Operational Agility: How Alpha Software Helps Manufacturers Adapt Faster

Gen Z’s relationship with alcohol is fluid, given how their tastes, social situations, and earnings are evolving. Keeping up with these shifting trends isn’t an easy task for beverage manufacturers.

They need smart tools that can stay on the pulse of Gen Z’s drinking habits, allow them to experiment on the fly, and ensure they remain compliant with regulatory requirements. Connecting these disparate systems is a job for Alpha Software.

Here’s how the low-code software from Alpha Software can help industry players tap into Gen Z’s low-alcohol preference:

Real-Time Data: Gaining Instant Market and Consumer Insights

Many beverage brands still depend on stale, outdated data from traditional retail and distributor networks. Information from this channel loses its value by the time of analysis. In contrast, a more centralized data system, built with Alpha Software’s low-code tools, can help companies pull raw and live information from firsthand sources, such as stores, loyalty apps, social media, and even online sales.

This will give them clear and instant access to ideas and products that are working. For example, a live dashboard can send out alerts if a new non-alcoholic cider’s launch begins trending on TikTok or when sales spike, so that marketing and distribution teams can execute their next move immediately.

Accelerated R&D: Faster Product Experimentation With Lower Risk

Having access to low-code tools and apps can help beverage companies swiftly test new product ideas in response to changing tastes without risk. Whether you’re launching a new low-ABV variant or a cannabis-infused flavor, you won’t have to go through long, traditional developmental cycles. Instead, your team can quickly:

• Build and test new SKUs through a low-code digital app that gives you instant sales feedback, instead of waiting for data from a full-scale rollout.
• Collect sales data by specific zip codes and demographics for regional product launches in smaller batches. This can help you gauge the product’s initial response with a smaller group before rolling it out widely.
• Gather consumer feedback from a loyalty or review app on a new launch (e.g., THC-infused mocktail) that feeds data directly into your analytics platform.
• Tweak or alter a new product’s positioning or formula in the first month based on initial sales reports and live data, rather than waiting for delayed reaction reports.

Regulatory Excellence: Built-In Compliance and End-to-End Traceability

Alcohol and cannabis are both high-risk products that undergo added scrutiny in terms of regulatory compliance. But with intuitive software from Alpha Software, you can automate the process of compliance. For example, you can track batches and ingredients, or test lab results in bigger volumes, ensuring your product meets local regulations.

Similarly, this software ensures you don’t fall behind when the government introduces new regulations. When that happens, the software can flag non-compliant SKUs early in the system, way before they hit the shelves. This can save you significant time and money, while also protecting your brand’s reputation.

Data-Driven Growth: Smarter Consumer Segmentation in NoLo Categories

Software can make it easier for manufacturers to gather and analyze first-party data, whether through loyalty apps or direct-to-consumer (D2C) websites. This means you’ll gain firsthand insights about how consumers are using your products. You’ll also have access to data segmented by their lifestyle and habits. Based on this data, companies can bolster their marketing efforts or send bespoke offers to their Gen Z consumers.

You can also design more personalized campaigns for customers who consume cannabis beverages versus those who prefer alcohol- or cannabis-free options.

For instance, let’s assume that a beverage brand has launched both low-alcohol spritzers and a CBD-infused soda range. Using a low-code loyalty app built via Alpha Software, it can track which products appeal to which demographics and help tailor marketing campaigns accordingly. For example, 20-something consumers prefer CBD variants, while 30-something consumers prefer spritzers.

Strategic Readiness: Demand Forecasting and Scenario Planning

With beverage trends often evolving overnight, it’s daunting (and expensive) for manufacturers to test strategies in a real-world environment. However, AI-powered software can help you test your strategies in a “what-if” scenario before rolling them out in reality.

You can feed trends data into your analytics platform to help you test the waters before launching a THC-infused product line in response to an emerging trend. Or, you can use the software to test the impact of premium pricing for a “low-alcohol, health-conscious” variant. Testing these strategies in a low-stakes environment can help you better plan product launches.

One thing is clear: Gen Zers are choosing to drink mindfully and seeking intentional alternatives. In this scenario, beverage manufacturers who understand and adapt to these trends will thrive.To do that, teams need software that allows them to explore new product ideas more freely, test safely, and stay compliant as regulations change.